Tesco Disappoints | Bitcoin 2018 Low | China is the banker

Bitcoin price made another low on Thursday for 2018,
thanks to South Korea’s Justice Minister. It is another
bad day for cryptocurrencies and once again the news which
is hitting the cryptomarket is on the regulatory. According
to South Korea’s Justice Minister, the country is busy in
preparing a bill which will ban all cryptocurrencies
trading. His stance towards digital currencies seems to be
far-fetched given the market cap of South Korea’s
cryptocurrency exchanges. Yes, the price of bitcoin in South
Korea pride at a premium of around 30 percent and
developments like today are designed to reduce that premium.
We do think this is what the regulators are trying. Banning
cryptocurrencies altogether would be difficult given that
the country is one of the biggest market in the world
especially for bitcoin and Ethereum.

It is important to
keep in mind that this is not the first time that the
regulators have gone after the cryptocurrency market.
During this week alone, we have seen two headlines emerging
from South Korea aimed at Bitcoin by using the regulatory
tactic. There is no doubt that the demand for Bitcoin in
South Korea is massive and some elements of the public
behaviour (when it comes to trading the cryptocurrencies)
aren’t far from gambling habits.

Nonetheless, traders
should not read too much into the South Korean situation
because even once the bill is drafted, it would require a
backing of 297 members of the National Assembly, a process
which could easily take months or even years.

China and US treasuries

‘China has
reduced their purchase of US treasuries’ was the news
which crashed the prices of the US Treasuries and pushed the
dollar index lower yesterday. But the Chinese officials
clearly labelled this as fake news and assured markets that
China is only diversifying its options. We do know that
China is the largest buyer of the US Treasuries, and if
there is any reduction in the Chinese appetite for the US
Treasuries, it would have serious consequences for the
global markets.

In 2018, the US is looking to boost its
debt supply significantly and without the Chinese demand for
the US Treasuries, the situation would have a different
outcome. The US extending its hand of friendship towards
Taiwan does make the situation more arduous (China and
Taiwan are old rivals). Therefore, the underlying message
should not be neglected; the US should tread very carefully.
China is currently holding 1.2 trillions of US debt and it
has the ability and power to jolt the US markets. President
Trump should think more seriously towards the Chinese trade
surplus situation. Every action would have its consequences,
whether it is geared towards how China is dealing with a
North Korean nuclear crisis or something else. China is
certainly not tied under any agreement to buy US bonds and
the message is clear that there are other debts which the
country can always look to buy.

Tesco
Disappoints

Christmas sale was disappointing,
that is the message from the U.K.’s biggest grocery
retailer, Tesco. Weeks leading up to Christmas were the most
important ones and the firm had a major problem with its
supplier, Palmer and Harvey. The company did experience a
1.9 percent rise in like for like sales (3Q LFL sale; Act,
2.3%, Est, 2.4%). However, looking at competitors such as
Sainsbury and Morrison, both have beaten their forecast for
Christmas trading. This doesn’t put Tesco in a strong
position at all. The retailer which dominates the British
High Street needs to make sure that it keeps its tools sharp
to fight inflationary pressure by keeping the prices low.
There is no doubt that Tesco has turned the corner and
avoided a Debenhams style disaster but it needs to make sure
that it stays on track to deliver on its medium-term
ambition. This is mainly because the competition is fierce
in this space and discounters such as Lidl and Aldi have
performed extremely well. Lidl’s Christmas sales
increased by 16% and Aldi saw
15%.

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